Buffalo Talent Search has an annual payroll of $200,000. In addition, the company incurs payroll tax expense of 7%. At Deember 31, Buffalo owes salaries of $7,500 and FICA and other payroll tax of $650. The company will pay these amounts early next year.

Requirement

1. Show what Buffalo will report for the foregoing on its income statement for the year and on its year-end balance sheet